When many people imagine a tax audit, they picture shadowy IRS agents combing through tax returns to seize upon every tiny flaw. This misconception couldn’t be further from the truth. No one looks forward to a tax audit, but the process is not necessarily as painful as you may think. To demystify the process, let’s take a look at some common myths—and facts—regarding tax audits.
Myth 1: You should be scared of tax audits
Fact: The most common myth about tax audits is that they should necessarily be feared. There’s a reason why audits have such a bad reputation: Most people are needlessly afraid of them. The thought of the IRS picking through your tax return may seem intimidating, but there is little to fear. There are some penalties associated with tax audits, but these usually involve fees, not jail time. If you are still concerned about an audit, consult a skilled tax attorney.
Myth 2: A tax preparer can always protect you from an audit
Fact: Some taxpayers hire tax professionals to complete their returns for them, believing that this will prevent an audit. The truth is that tax returns that are prepared and filed by a tax preparer are still subject to audits. Some unscrupulous people who have little to no experience will even pass themselves off as tax specialists and charge an exorbitant fee. If you wish to hire someone to prepare your taxes, do your research and hire someone with a good reputation and extensive experience.
Myth 3: Claiming deductions or credits will trigger an audit
Fact: Another common myth is that filing for various deductions or credits will trigger an audit. Many taxpayers seem to believe that certain deductions or credits will seem suspicious to the IRS. It is true that some people do try to unlawfully exploit the tax code, but the vast majority of tax returns that claim deductions or credits will not flag the IRS for an audit.